Louise Haigh said it was economically irresponsible to create more jobs in central London.
Photograph: Stefan Rousseau/PA

The government has been accused of showing contempt for the north of England after it announced that the Department for Business, Innovation and Skills (BIS) would close its biggest office outside London.

Plans to close the BIS office in Sheffield by 2018 were announced on Thursday by the department’s permanent secretary, Martin Donnelly, who told the centre’s 247 staff that those faced with redundancy would be provided with “comprehensive support”.

Government business department shuts largest non-London office

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The announcement prompted accusations that the chancellor’s “northern powerhouse” project – which is itself overseen by BIS – was empty rhetoric. The closure of the Sheffield office is part of a programme to reduce the department’s operating costs and staff size by 2020.

Speaking during an urgent question in parliament on Friday, the MP for Sheffield Heeley, Louise Haigh, said: “For Sheffield, which has now lost 500 jobs at HMRC, 100 jobs at Forgemasters [a steel company], 400 jobs at the local authority, people in my city would be right to ask: why have the Tories got it in for Sheffield?”

BIS staff in Sheffield were told that the department was to create a combined central HQ and policy centre in London, so that government ministers could access policy expertise more easily. They were told the Sheffield office would not be viable once all policy roles had moved to the capital.

Haigh, who serves as shadow minister for digital industries, said that the decision spoke of the government’s “London-centric focus and contempt for the north of England” and that it was “economically irresponsible” to create more jobs in central London, which was suffering from a housing crisis.

Sheffield ‘has been supported by political parties of all colours’, according to minister Anna Soubry. Photograph: Alamy

“They think a consolidated, combined central HQ and policy centre has to be, by rights, in London, rather than in Sheffield, where the operating costs are cheaper and the perspective on UK investment much broader,” she said.

Anna Soubry, minister of state for small business, industry and enterprise, responded to Haigh’s comments by accusing her of talking down “the great city of Sheffield”.

“I take great exception to members from the other side who stand up and talk down the great city of Sheffield, which has a city deal which is outstanding, as they recognise locally,” she said. “Which is why it has been supported by political parties of all colours in Sheffield.”

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“As somebody who was born and bred only 17 miles from Sheffield, I don’t need any lectures from the honourable lady and, in particular, not from the party opposite given that the last Labour government closed offices in York and Liverpool and axed over 1,500 jobs in Preston and across the Fylde coast as part of a major rationalisation of DWP [Department for Work and Pensions] offices.”

George Osborne’s northern powerhouse project aims to boost economic growth in the north of England – particularly in Liverpool, Manchester, Leeds, Sheffield and Newcastle – and rebalance the UK economy away from London and the south-east, partly by devolving political power to northern regions.

The civil service has, however, become increasingly centralised since Osborne first became chancellor in 2010. According to the Institute for Government, the proportion of civil service jobs based in London has increased from 16% in 2010 to 18% in March 2015, when there were 80,000 civil servants in the capital.